With vehicle prices at near-record highs, affordability is a key concern for many consumers. In addition to high vehicle prices, the current high-rate environment makes traditional loan payments prohibitively expensive to some consumers.
$735
Average new loan monthly payment in Q2 2024
17.8%
The share of consumers taking on loans with new-vehicle monthly payments of $1,000 or more was 17.8% in Q2 2024
69 months
The average new-vehicle loan term in Q2 2024 was 69 months, the highest point since the end of 2022
Source: Edmunds
How Residual Based Financing Can Help
Providing this option not only meets member needs but also positions your financial institution as a flexible and borrower-focused lender in a competitive market.
LOWER PAYMENT
Up to 40% lower!
One of the most significant advantages of residual based financing for borrowers is the potential for lower monthly payments. As buyers are only financing the cost of depreciation rather than the full purchase price, payments can be considerably reduced.
ACCESSIBLE FINANCING
Lower payments make vehicle financing more accessible to members with limited budgets, potentially increasing your financial institution’s market share in auto lending.
BETTER VEHICLES
Additionally, by financing the depreciation rather than the entire cost with RBF, higher-end or newer pre-owned vehicles become more accessible to average buyers.
We discussed this topic in our recent webinar series on residual based financing, press play to learn more.